: M. : 5 July 2002 / Malaysia. : 12 September (vi) Status : Resident-Controlled Company Bumiputera-Controlled Company

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1 PRINCIPAL TERMS AND CONDITIONS OF THE PROPOSED ISSUE BACKGROUND INFORMATION 1. Issuer (i) Name : Naim Cendera Holdings Berhad ( NCHB or Issuer ) (ii) Address : 9 th Floor, Wisma Naim, 2 ½ Miles, Rock Road, Kuching, Sarawak (iii) Business Registration No. (iv) Date /Place of Incorporation : M : 5 July 2002 / Malaysia (v) Date of Listing (in case of a public listed company) : 12 September 2003 (vi) Status : Resident-Controlled Company Bumiputera-Controlled Company (vii) Principal Activities : Investment holding and provision of management services to its subsidiaries (viii) Board of Directors : Directors (as at 8 August 2007) Datuk Abdul Hamed bin Hj. Sepawi Datuk Hasmi bin Hasnan Dr. Sharifuddin bin Abdul Wahab Ahmad bin Abu Bakar Ir. Suyanto bin Osman Kueh Hoi Chuang Abang Hasni bin Abang Hasnan YB Tuan Haji Hamden bin Ahmad Ir. Abang Jemat bin Abang Bujang Datu Haji Abdul Rashid bin Mohd Azis Sylvester Ajah Ajah bin Subah Professor Abang Abdullah bin Abang Mohamad Alli 1

2 (ix) Structure of shareholdings and names of shareholders or, in the case of public company, names of all substantial shareholders (as at 8 August 2007) : Shareholder Datuk Hasmi bin Hasnan Datuk Abdul Hamed bin Hj. Sepawi Island Harvest Sdn Bhd Lembaga Tabung Haji Tapak Beringin Sdn Bhd Employees Provident Fund Board <-Direct-> No. of Ordinary Shares <-Indirect-> No. of Ordinary Shares % 28,918,850 43,192, ,150,100 28,067, ,769, ,229, ,406, ,677,500 7,634, (x) Authorised share capital (as at 8 August 2007) Paid-up share capital (as at 8 August 2007) : RM500,000, divided into 500,000,000 ordinary shares of RM1.00 each : RM250,000, divided into 250,000,000 shares of RM1.00 each 2

3 INDICATIVE TERMS AND CONDITIONS 2 Names of parties involved in the proposed transaction (where applicable) Principal Arranger Adviser/Lead : CIMB Investment Bank Berhad (formerly known as Commerce International Merchant Bankers Berhad) ( CIMB ) Arranger : Not applicable Valuers : Not applicable Solicitors : Messrs. Zaid Ibrahim & Co (acting for CIMB) Financial Adviser : Not applicable Technical Adviser : Not applicable Guarantor : Not applicable Messrs Alvin Chong & Partners (acting for the Issuer) Trustee : CIMB Trustee Berhad (formerly known as Bumiputra- Commerce Trustee Berhad) Facility Agent : CIMB Primary Subscribers and amount subscribed (where applicable) : If applicable, the Primary Subscribers will be identified prior to such issuance. Underwriter(s) Amount Underwritten and : The Islamic medium term notes ( IMTNs ) and the Islamic commercial papers ( ICPs ) (collectively, the Islamic Securities ) will not be underwritten. Syariah Adviser : CIMB Islamic Shariah Committee Central Depository : Bank Negara Malaysia ( BNM ) Paying Agent : BNM Reporting Accountant : Messrs. KPMG Others (please specify) : Lead Manager CIMB Bookrunner (if applicable) CIMB 3

4 Tender Panel Members Persons to whom an issue of, or an offer or invitation to subscribe, the Islamic Securities is made would fall within Schedule 2 or Section 38(1)(b) and Schedule 3 or Section 39(1)(b) and would fall within Schedule 5 or Section 66(3) of the of the Securities Commission Act 1993 as amended from time to time ( SCA ). 3 Islamic Principle Used : In respect of each issuance, the Islamic Securities shall be issued either under the Syariah principle of Musyarakah or Murabahah. The Islamic Securities issued under the principle of Musyarakah shall be known as Sukuk Musyarakah and the Islamic Securities issued under the principle of Murabahah shall be known as Murabahah Notes. 4 Facility Description : Sukuk Musyarakah In respect of each issue of Sukuk Musyarakah, under the Islamic principle of Musyarakah, potential investors will, from time to time, form a partnership ( Musyarakah Venture ) amongst themselves for the purpose of investing in fractions of undivided interest ( Portfolio Units ), in a pool of Syariah-compliant shares or other assets ( Assets ) identified and provided in kind by NCHB ( Portfolio ) for the purpose of the transaction. The Musyarakah partners ( Sukukholders ) investment in the Musyarakah Venture is via the subscription of trust certificates ( Sukuk ) to be issued by NCHB. NCHB shall make a declaration of trust on the Portfolio to be held by the Portfolio Trustee for the benefit of holders of the Portfolio Units ( Portfolio Unit holders ). On the date of such declaration of trust, the initial owner of the Portfolio Units shall be the first holder of all the Portfolio Units. The initial owner of the Portfolio Units, as the first Portfolio Unit Holder, may from time to time, sell the Portfolio Units to the Issuer (on behalf of the Sukukholders). For each issue of Sukuk, Portfolio Units shall be issued by the Portfolio Trustee to the initial owner of Portfolio Units who will then sells such Portfolio Units to the Issuer (on behalf the Sukukholders). The Issuer will fund the purchase of Portfolio Units by the issuance of Sukuk. The Sukukholders shall contribute their portion of the capital ( Musyarakah Capital ) for the purpose of investment in the Portfolio Units. Any profit derived from the Musyarakah Venture will be distributed in proportion 4

5 to each Musyarakah Partner s Musyarakah Capital, as further described below. Similarly, any losses will be borne in proportion to the Musyarakah Partner s Musyarakah Capital. The subscription of the Sukuk essentially represents the investors undivided proportionate interests/investments (through the issuer) in the Portfolio Units. The Issuer will act as agent/wakeel of the Sukukholders in terms of buying, holding and selling the Portfolio Units. The expected return to the Sukukholders under the Musyarakah Venture ( Expected Return ) shall be the yield for the Sukuk up to the maturity date of the Sukuk or the date ( Dissolution Date ) of declaration of a Dissolution Event (as defined below), whichever is applicable. Any profit or losses derived from the Musyarakah Venture will be distributed or borne by each Sukukholder in proportion to each Sukukholders respective contribution of the Musyarakah Capital. In respect of Sukuk Musyarakah with periodic distribution, income from the Musyarakah Venture of up to an amount equal to a certain percentage of the face value of the Sukuk Musyarakah per annum, calculated on the basis of the actual number of days in the relevant period ( Expected Periodic Distribution ) shall be distributed periodically in the form of periodic distribution ( Periodic Distribution ). The Periodic Distribution shall be made semi-annually or such other period to be agreed each year (each such date for distribution, a Periodic Distribution Date ). Any shortfall between the Expected Periodic Distribution and the actual income generated for such relevant period shall be paid by NCHB as an advance part payment of the Exercise Price (see below). The advance part payment will be set-off against the Exercise Price payable by NCHB pursuant to the Purchase Undertaking (as defined below). In respect of Sukuk Musyarakah without Periodic Distribution, income from the Musyarakah Venture of up to the Expected Return shall be distributed on a one-off basis upon the maturity date or the Dissolution Date ( One-off Distribution ), whichever is applicable. Any shortfall between the Expected Return and the actual income generated for such relevant period shall be paid by NCHB as an advance part payment of the Exercise Price (see below). The advance part payment will be setoff against the Exercise Price payable by NCHB pursuant to the Purchase Undertaking. 5

6 The Sukukholders shall appoint NCHB as manager of the Portfolio Units. The Sukukholders shall agree that any returns in excess of the Expected Return shall be retained by NCHB as an incentive fee. Under a purchase undertaking ( Purchase Undertaking ), NCHB in its capacity as obligor ( Obligor ) shall give an undertaking to the Trustee pursuant to which the Obligor shall purchase the Portfolio Units from the issuer at the Exercise Price upon the maturity date of the Sukuk Musyarakah or on the Dissolution Date. The Exercise Price shall be determined based on the following formula: (i) in the case of Sukuk Musyarakah without Periodic Distribution: Musyarakah Capital plus Expected Return less One-off Distribution; (ii) in the case of Sukuk Musyarakah with Periodic Distribution: Musyarakah Capital plus Expected Return less total Periodic Distributions. On any payment of the Exercise Price, NCHB will be entitled to set-off the Exercise Price with any advance part payment made by NCHB to make good the difference between the income from the Musyarakah Venture and the Expected Periodic Distribution or the Expected Return, as set out above. In the event of overdue payments of any amount pursuant to the Purchase Undertaking, NCHB shall pay compensation (Ta widh) to the Trustee on such overdue amounts at the rate and manner prescribed by the Securities Commission ( SC ) s Syariah Advisory Council. The Portfolio Units may only be sold to NCHB (in its capacity as the Obligor) pursuant to the Purchase Undertaking and may not be sold to any other party or in any other manner. A diagrammatical illustration of the Sukuk Musyarakah transaction is set out in Appendix A. Murabahah Notes Under the Islamic principle of Murabahah, the Issuer and 6

7 the Trustee (acting on behalf of the Murabahah ICP/IMTN holders) shall execute purchase agreements under which the Issuer will, from time to time, sell the Assets to the Trustee. The purchase price will be equivalent to the Issue price of the Murabahah ICP/IMTN. The purchase price of the Assets in relation to each issuance of Murabahah ICP/IMTN shall comply with the SC s Syariah Advisory Council s Pricing Guidelines issued on 31 December 2003 and 30 April Subsequent to each purchase agreement, the Trustee will sell the Assets to the Issuer to be evidenced by a relevant sale agreement. The obligation of the Issuer to pay the selling price under the respective sale agreement will be evidenced by the Murabahah Notes in the form of primary Murabahah ICP/IMTN and, where applicable, non-detachable secondary Murabahah IMTNs which represent the profit portion of the selling price. A diagrammatical illustration of the Murabahah Notes transaction is set out in Appendix A. 5 Issue Size : The nominal value of the outstanding ICPs issued under the Islamic CP Programme shall not exceed RM100 million at any point in time. The nominal value of the outstanding IMTNs issued under the Islamic MTN Programme shall not exceed RM500 million at any point in time. In addition, the aggregate nominal value of the outstanding ICPs issued under the Islamic CP Programme and the nominal value of the outstanding IMTNs issued under the Islamic MTN Programme, shall not exceed RM500 million at any point in time. (collectively, the Islamic CP Programme and Islamic MTN Programme shall be referred to as the Programmes ) 6 Issue Price : ICPs The ICPs shall be issued at a discount and the issue price shall be calculated in accordance with the Rules on Fully Automated System for Issuing/Tendering ("FAST") issued by BNM, as amended or substituted from time to time ( FAST Rules ). IMTNs The IMTNs shall be issued at par or at a discount and the issue price shall be calculated in accordance with the FAST Rules. 7

8 7 Tenure of Facility/Issue : Islamic CP Programme Seven (7) years from the date of the first issue under the Islamic CP Programme, provided that the first issue of ICPs under the Islamic CP Programme shall be no later than two (2) years from the date of the SC s approval. Islamic MTN Programme Fifteen (15) years from the date of the first issue under the Islamic MTN Programme, provided that the first issue of IMTNs under the Islamic MTN Programme shall be no later than two (2) years from the date of the SC s approval. ICPs one (1), two (2), three (3), six (6), nine (9) or twelve (12) months as the Issuer may select, provided that the ICPs mature prior to the expiry of the Islamic CP Programme. IMTNs more than one (1) year and up to fifteen (15) years as the Issuer may select, provided that the IMTNs mature prior to the expiry of the Islamic MTN Programme. 8 Coupon/Profit or Equivalent Rate (%) (please specify) : ICPs The ICPs shall be issued without Expected Periodic Distribution/Profit. IMTNs The Expected Periodic Distribution/Profit Rate (if applicable) will be determined at the point of each issuance under the Islamic MTN Programme. 9 Coupon/Profit Payment Frequency and Basis : ICPs The ICPs shall be issued without Expected Periodic Distribution/Profit. IMTNs Semi-annual or such other period as the Issuer and the Lead Manager may agree (if the IMTNs of a particular issuance are issued with Expected Periodic Distribution/Profit) with the first Expected Periodic Distribution/profit payment commencing six (6) months or such other period, as the case may be, from the relevant date of issuance. In the case of Sukuk Musyarakah with Expected Periodic Distribution/Profit, the Expected Periodic Distribution/Profit shall be calculated on the basis of the actual number of days elapsed and actual number of days basis (Actual/Actual). 8

9 In the case of Murabahah Notes with Profit, the Profit Rate shall be calculated on the basis of the actual number of days elapsed and actual number of days basis (Actual/Actual). 10 Yield to Maturity (%) : ICPs The yield to maturity/expected Return to maturity will be determined at the point of each issuance under the Islamic CP Programme and agreed between the Issuer and the investors/primary Subscribers. 11 Security : Nil. IMTNs The yield to maturity/expected Return to maturity will be determined at the point of each issuance under the Islamic MTN Programme and agreed between the Issuer and the investors/primary Subscribers. 12 Details of Utilisation of Proceeds : The proceeds of the Islamic CP Programme and the Islamic MTN Programme shall be utilised to meet the Syariah-compliant working capital requirements and the Syariah-compliant general corporate purposes of NCHB and its subsidiaries ( Group ). 13 Sinking Fund (if any) : Not applicable. 14 Rating - Indicative Credit Rating Assigned - Name of Rating Agency : The final rating for the ICPs and the IMTNs are P1 and AA3, respectively. : RAM Rating Services Berhad ( RAM ). 15 Form and Denomination : The Islamic Securities shall be issued in accordance with (1) the Code of Conduct and Market Practices for the Malaysian Corporate Bond Market issued by the Institut Peniaga Bon Malaysia and approved by BNM ( IPBM Code ) and (2) the Rules on the Scripless Securities under the Real Time Electronic Transfer of Funds and Securities ( Rentas ) system issued by BNM ( Rentas Rules ) and (3) the Rules on Fully Automated System for Issuing/Tendering ( FAST Rules ) issued by BNM, or their replacement thereof (collectively the Codes of Conduct ) applicable from time to time. The Rentas Rules shall prevail to the extent of any inconsistency between the Rentas Rules and the IPBM Code. Each tranche of the Islamic Securities shall be represented by a global certificate to be deposited with BNM, and is exchanged for definitive bearer form only in certain 9

10 limited circumstances. The denomination of the Islamic Securities shall be RM1,000 or in multiples of RM1,000 at the time of issuance. 16 Mode of Issue : ICPs Via competitive tender, direct placement or bought deal basis. IMTNs Via book running on a best efforts basis, direct placement or bought deal basis. Issuance of the Islamic Securities shall be in accordance with the FAST Rules, subject to such exemptions (if any) granted from time to time. The Islamic Securities may be issued in multiples of RM1,000 but subject to the FAST Rules and the following conditions: 1) a minimum issue size of RM10,000,000 for each issue; 2) the issue notice shall be given to the Facility Agent at least eight (8) business days (for the first issue) or six (6) business days (for subsequent issues) prior to and excluding the date of proposed issue; and 3) the ratings for the ICPs and the IMTNs are at least P1 and AA3, respectively for the first issue and at least investment grade for subsequent issues. 17 Selling Restrictions at Issuance : Selling Restrictions at Issuance The Islamic Securities may only be offered, sold, transferred or otherwise disposed directly or indirectly to a person to whom an offer or invitation to subscribe the Islamic Securities may be made and to whom the Islamic Securities are issued would fall within Schedule 2 or Section 38(1)(b) and Schedule 3 or Section 39(1)(b) of SCA and would fall within Schedule 5 or Section 66(3) of the SCA. Selling Restrictions Thereafter The Islamic Securities may only be offered, sold, transferred or otherwise disposed directly or indirectly to a person to whom an offer or invitation to purchase the Islamic Securities would fall within Schedule 2 or Section 38(1)(b) of SCA and would fall within Schedule 5 and Section 66(3) of the SCA. 18 Listing Status : The Islamic Securities will not be listed on Bursa Malaysia Securities Berhad or any other stock exchange. 10

11 19 Minimum Level of Subscription (RM or %) : ICPs The minimum level of subscription for each issue that is not issued on a bought deal or on a direct placement basis (which shall be fully subscribed) under the Islamic CP Programme shall be 5% of the size of a particular issue. IMTNs The minimum level of subscription for each issue that is not issued on a bought deal or on a direct placement basis (which shall be fully subscribed) under the Islamic MTN Programme shall be 5% of the size of a particular issue. 20 Other regulatory approvals required in relation to the issue, offer or invitation and whether or not obtained (please specify) : None. 21 Identified Assets : Sukuk Musyarakah The portfolio ( Portfolio ) is a pool of Syariah-compliant Assets identified and provided in kind by NCHB for the purpose of the transaction. The Assets shall be endorsed by the Syariah Adviser. At all times, the tangible Assets must be equal to at least 1/3 of the nominal value of the Sukuk Musyarakah outstanding. NCHB shall act as agent of the Sukukholders in terms of buying, holding and selling the Portfolio Units. For each issue of Sukuk, Portfolio Units shall be issued by the Portfolio Trustee to the initial owner of Portfolio Units who will then sell such Portfolio Units to the Issuer (on behalf of the Sukukholders). For each issue, the total value of the Assets in the Portfolio (which will be based on the value of the Assets at the time they are added to the Portfolio) shall be at least equivalent to the nominal value of the Sukuk Musyarakah to be issued and outstanding, if any. NCHB shall have the right to exchange the Assets in the Portfolio with such other qualified Assets provided that such Assets must be endorsed by the Syariah Adviser and the value of the Assets in the Portfolio (which will be based on the value of the Assets at the time they are added to the Portfolio) after the exchange would be at least equivalent to the nominal value of the Sukuk outstanding. 11

12 The Assets shall be unencumbered at the time of the transactions or alternatively, if the relevant Asset is encumbered at that time, the relevant chargee s consent shall be obtained for such Asset to be used for the transactions. Murabahah Notes The Assets based on the SC s Syariah Advisory Council criteria identified and provided by NCHB for the purpose of the transaction. The Assets shall be endorsed by the Syariah Adviser. The value of the Assets shall be based on the fair values whereby the valuation and the purchase price shall comply with the SC s Syariah Advisory Council s Pricing Guidelines issued on 31 December 2003 and 30 April Purchase and Selling Price/Rental (where applicable) : Sukuk Musyarakah Not applicable Murabahah Notes Asset Purchase Price The Asset Purchase Price of the Assets under each Asset Purchase Agreement shall be equal to the proceeds from the issuance of the relevant Murabahah Notes. The Asset Purchase Price can only be determined at the point of issuance upon the determination of the profit rate and yield to maturity of the Murabahah Notes (see paragraphs 8 and 10 above). The Murabahah Purchase Price will comply with the SC s Syariah Advisory Council s Pricing Guidelines issued on 31 December 2003 and 30 April Asset Sale Price The Asset Sale Price of the Assets under each Asset Sale Agreement shall be equal to the face value of all the Primary Notes and, if applicable, Secondary Notes. The Asset Sale Price can only be determined at the point of issuance upon the determination of the profit rate of the Murabahah Notes (see paragraph above). 23 Conditions Precedent : The conditions precedent to the first issuance shall include but are not limited to the following (all have to be in form and substance acceptable to the Lead Manager) (or Primary Subscriber (whichever applicable)). 12

13 A. Main Documentation 1) The transaction documents have been executed and, where applicable, stamped and presented for registration. 2) All relevant notices and acknowledgements (where applicable) shall have been made or received as the case may be. B. Issuer 1) Certified true copies of the Certificate of Incorporation, and the Memorandum and Articles of Association, of the Issuer. 2) Certified true copies of the latest Forms 24 and 49 of the Issuer. 3) A certified true copy of board resolutions of the Issuer authorising, among others, the execution of the transaction documents. 4) A list of the Issuer s authorised signatories and their respective specimen signatures. 5) A report of the relevant company search of the Issuer. 6) A report of the relevant winding up search or the relevant statutory declaration of the Issuer. C. General 1) The approval from the SC and, where applicable, all other regulatory approvals. 2) The ICPs and IMTNs are rated P1 and AA3, respectively. 3) Evidence that all the transaction fees, costs and expenses have been paid in full. 4) The Lead Manager has received from its legal counsel a favourable legal opinion addressed to it and the Trustee advising with respect to, among others, the legality, validity and enforceability of the transaction documents and a confirmation addressed to the Lead Manager that all the conditions precedent have been fulfilled. 13

14 5) Such other conditions precedent as advised by the legal counsel of the Lead Manager. 24 Representations and Warranties : To include but not limited to the following: (i) NCHB is a company with limited liability duly incorporated and validly existing under the laws of Malaysia, has full power to carry on its business and to own its property and assets, and has full beneficial ownership of all its assets; (ii) (iii) (iv) the memorandum and articles of association of NCHB incorporate provisions which authorise, and all necessary corporate and other relevant actions have been taken to authorise, and all relevant consents and approvals of any administrative, governmental or other authority or body in Malaysia have been duly obtained and are in full force and effect which are required to authorise, NCHB to execute and deliver and perform the transactions contemplated in the transaction documents in accordance with their terms; neither the execution and delivery of any of the transaction documents nor the performance of any of the transactions contemplated by the transaction documents did or does as at the date this representation and warranty is made or repeated (a) contravene or constitute a default under any provision contained in any agreement, instrument, law, ordinance, decree, judgment, order, rule, regulation, licence, permit or consent by which NCHB or any of its assets is bound or which is applicable to NCHB or any of its assets, (b) cause any limitation on NCHB or the powers of its directors, whether imposed by or contained in its memorandum and articles of association or in any agreement, instrument, law, ordinance, decree, order, rule, regulation, judgment or otherwise, to be exceeded, or (c) cause the creation or imposition of any security interest or restriction of any nature on any of NCHB s assets; each of the transaction documents is or will when executed and/or issued, as the case may be, be in full force and effect and constitutes, or will when executed or issued, as the case may be, constitute, valid and legally binding obligations of the NCHB enforceable in accordance with its 14

15 terms; and (v) any other representations and warranties as may be advised by the legal counsel of the Lead Manager and mutually agreed between the Issuer and the Lead Manager. 25 Events of Default : Events of Default or Dissolution Events shall include but are not limited to the following: (i) (ii) (iii) (iv) NCHB fails to pay any amount due from it under any of the transaction documents on the due date or, if so payable, on demand; any representation or warranty made or given by NCHB under the transaction documents or which is contained in any certificate, document or statement furnished at any time pursuant to the terms of the Islamic Securities and/or any of the transaction documents proves to have been incorrect or misleading in any material respect on or as of the date made or given or deemed made or given, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, NCHB does not remedy the failure within a period of thirty (30) days after NCHB became aware or having been notified by the Trustee of the failure; NCHB fails to observe or perform its obligations under any of the transaction documents or the Islamic Securities or under any undertaking or arrangement entered into in connection therewith other than an obligation of the type referred to in paragraph (i) above, and in the case of a failure which in the opinion of the Trustee is capable of being remedied, NCHB does not remedy the failure within a period of thirty (30) days after NCHB became aware or having been notified by the Trustee of the failure; there has been a breach by NCHB of any obligation under any of NCHB s existing contractual obligations which may materially and adversely affect NCHB s ability to perform its obligations under the transaction documents and, if in the opinion of the Trustee is capable of being remedied, NCHB does not remedy the breach within a period of thirty (30) days after NCHB became aware or having been notified by the Trustee of the breach; 15

16 (v) (vi) any indebtedness for borrowed moneys of NCHB becomes due or payable or capable of being declared due or payable prior to its stated maturity or any guarantee or similar obligations of NCHB is not discharged at maturity or when called and such declaration of indebtedness being due or payable or such call on the guarantee or similar obligations is not discharged or disputed in good faith by NCHB in a court of competent jurisdiction within thirty (30) days from the date of such declaration or call, or NCHB goes into default under, or commits a breach of, any agreement or instrument relating to any such indebtedness, guarantee or other obligations, or any security created to secure such indebtedness becomes enforceable; an encumbrancer takes possession of, or a trustee, receiver, receiver and manager or similar officer is appointed in respect of the whole or substantial part of the business or assets of NCHB, or distress, legal process, sequestration or any form of execution is levied or enforced or sued out against NCHB which may have a Material Adverse Effect on NCHB, or any security interest which may for the time being affect any of its assets becomes enforceable; For the purpose of this paragraph (vi), references to substantial shall mean 5% of the Group s net assets as reflected in its latest consolidated annual audited financial statements. (vii) (viii) NCHB fails to satisfy any judgement passed against it by any court of competent jurisdiction and no appeal against such judgement or no application for a stay of execution has been made to any appropriate appellate court within the time prescribed by law or such appeal or application for a stay of execution has been dismissed; any step is taken for the winding up, dissolution or liquidation of the Issuer or a resolution is passed for the winding up of NCHB or a petition for winding up is presented against NCHB and NCHB has not taken any action in good faith to set aside such petition within thirty (30) days from the date of service of such winding up petition or a winding up order has been made against NCHB; 16

17 (ix) (x) (xi) (xii) (xiii) (xiv) NCHB convenes a meeting of its creditors or proposes or makes any arrangement including any scheme of arrangement or composition or begins negotiations with its creditors, or takes any proceedings or other steps, with a view to a rescheduling or deferral of all or any part of its indebtedness or a moratorium is agreed or declared by a court of competent jurisdiction in respect of or affecting all or any part of its indebtedness or any assignment for the benefit of its creditors (other than for the purposes of and followed by a reconstruction previously approved in writing by the Trustee, unless during or following such reconstruction the Issuer becomes or is declared to be insolvent) or where a scheme of arrangement under section 176 of the Companies Act 1965 has been instituted against NCHB; where there is a revocation, withholding or modification of any licence, authorisation, approval or consent which in the opinion of the Trustee may materially and adversely impair or prejudice the ability of NCHB to comply with the terms and conditions of the Islamic Securities or the transaction documents; NCHB is deemed unable to pay any of its debts or becomes unable to pay any of its debts as they fall due or suspend or threaten to suspend making payments with respect to all or any class of its debts; any creditor of NCHB exercises a contractual right to take over the financial management of NCHB and such event in the opinion of the Trustee may have a Material Adverse Effect on NCHB; NCHB changes or threatens to change the nature or scope of a substantial part its business, or suspends or threatens to suspend or cease or threatens to cease the operation of a substantial part of its business which it now conducts directly or indirectly and such change or suspension or cessation in the opinion of the Trustee may have a Material Adverse Effect on NCHB; at any time any of the provisions of the transaction documents is or becomes illegal, void, voidable or unenforceable; 17

18 (xv) NCHB repudiates any of the transaction documents or NCHB does or causes to be done any act or thing evidencing an intention to repudiate any of the transaction documents; (xvi) any of the assets, undertakings, rights or revenue of NCHB are seized, nationalised, expropriated or compulsorily acquired by or under the authority of any governmental body which in the opinion of the Trustee may have a Material Adverse Effect on NCHB; (xvii) any event or events has or have occurred or a situation exists which in the opinion of the Trustee may have a Material Adverse Effect on NCHB, and in the case of the occurrence of such event or situation which in the opinion of the Trustee is capable of being remedied, NCHB does not remedy it within a period of thirty (30) days after NCHB became aware or having been notified by the Trustee of the event or situation; and (xviii) such other event as may be advised by the legal counsel of the Lead Manager and mutually agreed between the Issuer and the Lead Manager. Upon occurrence of an Event of Default/Dissolution Event, the Trustee may or shall (if directed to do so by the holders of the Islamic Securities) declare that an Event of Default/Dissolution Event has occurred and may take such proceedings against the Issuer as it may think fit to enforce the transaction documents. 26 Principal Terms and Conditions for Warrants (where applicable) : Not applicable. 27 Other Principal Terms and Conditions for the Issue 27.1 Purchase Undertaking (for Sukuk Musyarakah only) : NCHB in its capacity as the obligor (the Obligor ) shall give an undertaking to the Trustee pursuant to which the Obligor shall purchase the Portfolio Units from the Issuer at the Exercise Price (as described below) upon the maturity date of the Sukuk Musyarakah or on the Dissolution Date. Exercise Price shall be determined based on the following formula: 18

19 1. in the case of Sukuk Musyarakah without Periodic Distribution: Musyarakah Capital plus Expected Return less Oneoff Distribution; 2. in the case of Sukuk Musyarakah with Periodic Distribution: Musyarakah Capital plus Expected Return less total Periodic Distribution. On any payment of the Exercise Price, the Obligor will be entitled to set-off the Exercise Price with any advance part payment made by the Obligor to make good the difference between the income from the Musyarakah Venture and the Expected Periodic Distribution or the Expected Return, as set out under Paragraph 4 above. In the event of overdue payments of any amount pursuant to the Purchase Undertaking, the Obligor shall pay compensation (Ta widh) to the Trustee on such overdue amounts at the rate and manner prescribed by the SC s Syariah Advisory Council. The Portfolio Units may only be sold to the Obligor pursuant to the Purchase Undertaking and may not be sold to any other party or in any other manner Information Covenants : To include but not limited to the following: (1) the Issuer shall provide to the Trustee at least on an annual basis, a certificate confirming that it has complied with all its obligations under the transaction documents and the terms and conditions of the Islamic Securities and that there does not exist or had not existed, from the date the Islamic Securities were issued or the date of the last certificate issued as the case may be, any Event of Default, and if such is not the case, to specify the same; (2) the Issuer shall deliver to the Trustee the following: (a) as soon as they become available (and in any event within one hundred and eighty (180) days after the end of each of its financial years) copies of its consolidated financial statements for that year which shall contain the income statements and balance sheets of the Issuer and which are 19

20 audited and certified without qualification by a firm of independent certified public accountants acceptable to the Trustee; (b) (c) (d) as soon as they become available (and in any event within ninety (90) days after the end of the first half of its financial year) copies of its unaudited half yearly consolidated financial statements for that period which shall contain the income statements and balance sheets of the Issuer which are duly certified by any one of its directors; promptly, such additional financial or other information relating to the Issuer s business and its operations as the Trustee may from time to time reasonably request; and promptly, all notices or other documents received by the Issuer from any of its shareholders or its creditors which contents may materially and adversely affect the interests of the holders of the Islamic Securities, and a copy of all documents dispatched by the Issuer to its shareholders (or any class of them) in their capacity as shareholders or its creditors generally at the same time as these documents are dispatched to these shareholders or creditors, (3) the Issuer shall promptly notify the Trustee of any change in its board of directors and/or controlling shareholders; (4) the Issuer shall promptly notify the Trustee of any change in its condition (financial or otherwise) and of any litigation or other proceedings of any nature whatsoever being threatened or initiated against the Issuer before any court or tribunal or administrative agency which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents; (5) the Issuer shall promptly give notice to the Trustee of the occurrence of any Event of Default/ Dissolution Event or any event which, upon the 20

21 giving of notice and/or lapse of time and/or the issue of a certificate and/or the fulfilment of the relevant requirement as contemplated under the relevant transaction document would constitute an Event of Default/Dissolution Event ( Potential Event of Default ) forthwith upon becoming aware thereof, and it shall take all reasonable steps and/or such other steps as may reasonably be requested by the Trustee to remedy and/or mitigate the effect of the Event of Default/ Dissolution Event or the Potential Event of Default; and (6) any other covenants as may be advised by the legal counsel of the Lead Manager and mutually agreed between the Issuer and the Lead Manager Positive Covenants : To include but not limited to the following: (a) (b) (c) (d) The Issuer shall maintain in full force and effect all relevant authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) and will promptly obtain any further authorisations, consents, rights, licences, approvals and permits (governmental and otherwise) which is or may become necessary to enable it to own its assets, to carry on its business or for the Issuer to enter into or perform its obligations under the transaction documents or to ensure the validity, enforceability, admissibility in evidence of the obligations of the Issuer or the priority or rights of the financiers under the transaction documents and the Issuer shall comply with the same; the Issuer shall at all times on demand execute all such further documents and do all such further acts reasonably necessary at any time or times to give further effect to the terms and conditions of the transaction documents; the Issuer shall exercise reasonable diligence in carrying out its business and affairs in a proper and efficient manner and in accordance with sound financial and commercial standards and practices; the Issuer shall promptly perform and carry out all its obligations under all the transaction documents (including but not limited to redeeming the Islamic 21

22 Securities on the relevant Maturity Date(s) or any other date on which the Islamic Securities are due and payable) and ensure that it shall immediately notify the Trustee in the event that the Issuer is unable to fulfil or comply with any of the provisions of the transaction documents; (e) the Issuer shall prepare its financial statements on a basis consistently applied in accordance with approved accounting standards in Malaysia and those financial statements shall give a true and fair view of the results of the operations of the Issuer for the period to which the financial statements are made up and shall disclose or provide against all liabilities (actual or contingent) of the Issuer; (f) the Issuer shall promptly comply with all applicable laws including the provisions of the SCA and/or the notes, circulars, conditions or guidelines issued by the SC from time to time; and (g) such other undertakings as may be advised by the legal counsel of the Lead Manager and mutually agreed between the Issuer and the Lead Manager Negative Covenants : To include but not limited to the following (subject to the approval of the holders of the Islamic Securities pursuant to the terms and conditions of the transaction documents in relation to the Programmes): i. the Issuer shall not create or permit to exist any encumbrance, mortgage, charge (whether fixed or floating), pledge, lien, hypothecation, assignment by way of security, trust arrangement for the purpose of providing security or other security interest of any kind including, without limitation, title transfer and/or retention arrangements having a similar effect or any agreement to create any of the foregoing, but excluding (a) liens arising in the ordinary course of business by operation of law and not by way of contract, and (b) any security interest created or to be created by the Issuer over its construction/development contracts to secure guarantee facilities entered into by the Issuer for the purposes of the projects to which such construction/ development contracts relate; 22

23 ii. the Issuer shall not dispose any asset in excess of 5% of the Group s net asset (as reflected in its latest consolidated annual audited financial statement) in any financial year unless it is part of its ordinary course of business and on arm s length basis and will not have a Material Adverse Effect on the Issuer provided that the restriction in this clause (ii) shall not apply to any sale, transfer or disposal of Project Assets in connection with any asset securitisation transaction which the Issuer enters into on an arm s length basis and which will not have a Material Adverse Effect on the Issuer, Project Assets mean receivables of the Issuer payable by the Federal or Sarawak State Government from projects awarded by the Federal or Sarawak State Government; iii. the Issuer shall not add, delete, amend or substitute its Memorandum or Articles of Association in a manner inconsistent with the provisions of the transaction documents; iv. the Issuer shall not reduce its authorised or paid-up share capital whether by varying the amount, structure or value thereof or the rights attached thereto or by converting any of its share capital into stock, or by consolidating, dividing or sub-dividing all or any of its shares, or by any other manner save and except for any share buyback permitted under Section 67A of the Companies Act, 1965, as amended from time to time; v. the Issuer shall not declare or pay any dividends or make any distribution whether income or capital in nature to its shareholders if: (a) (b) an Event of Default/Dissolution Event has occurred, is continuing and has not been waived, or if following such payment or distribution an Event of Default/Dissolution Event would occur; or the requirements with respect to the Financial Covenants are breached or will be breached if calculated immediately following such payment or distribution; vi. with respect to loans to the Issuer from its shareholders, subsidiaries or associated companies: 23

24 (a) the Issuer shall not make any repayments (whether in relation to principal, interest or otherwise) of any such loans to its shareholders and associated companies so long as there are Sukuk outstanding and the Programmes are subsisting; (b) the Issuer may make any repayments (whether in relation to principal, interest or otherwise) of any such loans to its subsidiaries provided that: (1) there are no Event of Default/Dissolution Event which has occurred; and (2) the loan was granted to the Issuer pursuant to the Group's treasury cash management. vii subject to paragraph (vi) above, the Issuer shall not enter into any agreement with its shareholders, subsidiaries or associated companies unless such agreement is entered into: (a) in the ordinary course of its business; (b) on an arms-length basis; and (c) will not have a Material Adverse Effect on the Issuer; For the purposes of this Principal Terms and Conditions, Material Adverse Effect means any material adverse effect on the business or condition (financial or otherwise) or results of the operations of the Issuer or the occurrence of any event which may materially and adversely affect the ability of the Issuer to perform any of its obligations under any of the transaction documents. viii ix. the Issuer shall not use the proceeds of the Programmes except for the purposes set out in the Principal Terms and Conditions; the Issuer shall not lend any money to any party other than to (a) the Issuer's directors, officers or employees as part of their terms of employment; and (b) the Issuer s subsidiaries for the purpose of part-financing the development, construction and operating expenses in relation to the subsidiaries 24

25 property development and construction projects and purchase of lands, working capital requirements or pursuant to the Group s treasury cash management; and x. such other undertakings as may be advised by the legal counsel of the Lead Manager and mutually agreed between the Issuer and the Lead Manager Status : Sukuk Musyarakah The Sukuk Musyarakah shall represent the Sukukholders undivided proportionate interest in the Musyarakah Venture. The Sukuk Musyarakah shall at all times rank pari passu, without discrimination, preference or priority amongst themselves. The Obligor s obligations pursuant to the Purchase Undertaking shall constitute direct, unconditional and unsecured obligations of the Obligor and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves and pari passu with all other present and future unsecured and unsubordinated obligations of the Obligor, subject to those preferred by law and the transaction documents. Murabahah Notes The Murabahah Notes shall constitute direct, unconditional and unsecured obligations of the Issuer and shall at all times rank pari passu, without discrimination, preference or priority amongst themselves and at least pari passu with all other present and future unsecured and unsubordinated obligations of the Issuer, subject to those preferred by law and the transaction documents Redemption : Unless previously repurchased and cancelled, the Islamic Securities will be redeemed by the Issuer at 100% of their nominal value on their respective maturity dates Repurchase and Cancellation : The Issuer or any of its related corporations may at any time purchase the Islamic Securities at any price in the open market or by private treaty, but these repurchased Islamic Securities shall be cancelled and cannot be reissued Availability : Upon completion of documentation and, unless waived by the Lead Manager (or Primary Subscriber (whichever applicable)), compliance of all conditions precedent and other applicable conditions to the satisfaction of the Lead Manager (or Primary Subscriber (whichever applicable)). 25

26 27.9 Taxation : All payments by the Issuer shall be made without withholding or deductions for or on account of any present or future tax, duty or charge of whatsoever nature imposed or levied by or on behalf of Malaysia or any other applicable jurisdictions, or any authority thereof or therein having power to tax, unless such withholding or deduction is required by law, in which event the Issuer shall be entitled to make the relevant withholding or deductions. The Issuer shall not be required to gross up such amounts for which the withholding or deductions have been made Compensation for late and default payments ( Ta widh ) for Murabahah Notes : In the event any payments or amounts whatsoever under the Murabahah Notes shall become overdue, the Issuer shall pay compensation on such overdue payments or amounts at the rate and in the manner prescribed by the SC s Syariah Advisory Council or such relevant authority Governing Laws : Laws of Malaysia Jurisdiction : The Issuer shall unconditionally and irrevocably submit to the non-exclusive jurisdictions of the courts of Malaysia Financial Covenants : To include but not limited to: (1) The Issuer shall maintain an annual D:E Ratio of not exceeding one point two (1.2) times throughout the tenure of the Programmes; and (2) The Issuer shall maintain an annual Interest Cover Ratio of at least four (4) times throughout the tenure of the Programmes Debt to Equity Ratio ("D:E Ratio") : The D:E Ratio is the ratio of the indebtedness of the Group represented by: i) the aggregate face value of all outstanding ICPs, and all outstanding Primary IMTNs; ii) all other indebtedness for borrowed monies (be it actual or contingent) for principal only, hire purchase obligations, finance lease obligations, net exposure determined on a marked to market basis under any derivative instrument and obligations/ contingent liabilities under guarantees/call or put options of the Group but excluding any inter company loans which are subordinated to the Islamic Securities, 26

27 to the consolidated shareholders funds of the Issuer including, if any, preference equity, subordinated shareholders advances/loans and retained earnings/losses less intangibles (if any). The D:E Ratio shall be calculated for each financial year during the tenor of the Programmes based on the latest consolidated audited accounts of the Issuer. The calculations of the D:E Ratio shall be duly confirmed by the Issuer s external auditors on an annual basis and as and when such calculations are required to be made under the terms of the transaction documents. The Issuer shall arrange for the external auditor s confirmation to be forwarded to the Facility Agent for its distribution to the Trustee and the Rating Agency. For the avoidance of doubt, any double counting shall be disregarded Interest Cover Ratio : The Interest Cover Ratio is defined as the ratio of EBITDA (as defined below) to all interest and finance charges paid by the Issuer under the IMTNs and/or any other borrowings or financing arrangements of the Issuer during the previous twelve (12) months. For this purpose, EBITDA means earnings before interest, tax, depreciation and amortisation. The Interest Cover Ratio shall be calculated for each financial year during the tenor of the Programmes based on the latest consolidated audited accounts of the Issuer. The calculations of the Interest Cover Ratio shall be duly confirmed by the Issuer s external auditors on an annual basis and as and when such calculations are required to be made under the terms of the transaction documents. The Issuer shall arrange for the external auditor s confirmation to be forwarded to the Facility Agent for its distribution to the Trustee and the Rating Agency. For the avoidance of doubt, any double counting shall be disregarded Other Conditions : The Islamic Securities shall at all times be governed by the guidelines issued and to be issued from time to time by the SC, BNM and/or any other authority in Malaysia having jurisdiction over matters pertaining to the Islamic Securities, and the FAST Rules. 27